Commissioners endorse Farmington's request for power plant cost recovery

FARMINGTON — An effort by Farmington officials to recover some of their costs associated with the now-shuttered San Juan Generating Station has drawn the backing of the San Juan County Commission.

Commissioners voted unanimously on Jan. 3 during their meeting in Aztec in favor of a resolution supporting Farmington’s legislative request for the recovery of the costs. Farmington was a part owner of the plant, which was shut down and decommissioned in the fall, and is seeking tens of millions of dollars from state lawmakers.

The resolution calls for the Legislature to allow the Farmington Electric Utility System to recover the costs of undepreciated assets related to the plant valued at $23 million. It also calls for lawmakers to reimburse the utility $40 million for a shovel-ready project that would create 18 megawatts of replacement energy generation designed to offset a portion lost from the shutdown of the plant.

Farmington Mayor Nate Duckett appeared at the meeting to make a personal plea to commissioners to support the city’s request.

“We believe that those individuals who made the decision to pass the (Energy Transition Act, the 2019 state law that set new renewable energy standards for New Mexico and led to the eventual shutdown of the coal-fired San Juan Generating Station) at the state level should have some accountability to the ratepayers of the Farmington Electric Utility System … ,” Duckett said.

The mayor noted that if the city’s request is denied by lawmakers, Farmington ratepayers will face an “exorbitant” rate increase as the utility completes new projects designed to replace that energy generation capacity. He said city officials have been working on securing the permits for its first such project, and it already has a location designated for the facility.

“This 18 megawatts is really just the first of those 90 megawatts we recognize we will need in the long term,” Duckett said.

The overall cost of replacing those 90 megawatts of power lost from the closure of the San Juan Generating Station, he said, is $150 million.

The city’s request for money from state lawmakers comes against a rapidly changing backdrop in the energy sector, Duckett said.

“There is a high demand for power,” he said. “Regardless of the number of power plants they’ve taken offline, people still want to energize their homes and now, of course, plug in their automobile and everything associated with that demand. So while demand is up, supply is down. So we’re asking our group to go to Santa Fe and fight for us again in the hopes of recouping $23 million in undepreciated assets that are in the power plant right now. That is money that has already been spent by our ratepayers.”

When he was asked by Commissioner John Beckstead why there was no financial provision in the Energy Transition Act for the Farmington Electric Utility System as there was for the power plant’s biggest owner, the Public Service Co. of New Mexico, Duckett said the Legislature’s response at that time was to focus primarily on providing assistance to the workers who were going to lose their jobs. He said lawmakers also were aware that the City of Farmington was going to mount an effort to keep the plant open using carbon-capture technology, an idea the city recently abandoned.

“So I’m sure that played partially into that at that moment,” Duckett said.

All five commissioners voted in favor of the resolution.

Later in the same meeting, County Manager Mike Stark told commissioners that the county had received a decommissioning plan from PNM officials for the San Juan Generating Station. Stark said the county has hired Mountain West Consulting — a project management and construction management firm that supports electric utilities in the western United States — to review and evaluate the plan to make sure it complies with the county’s ordinance requiring the owners of such facilities to remediate those properties once they have ceased operation.

Stark said he has been told by PNM officials that they expect the decommissioning plan to take approximately two years to complete.

Mike Easterling can be reached at 505-564-4610 ormeasterling@daily-times.com. Support local journalism with a digital subscription: http://bit.ly/2I6TU0e.